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Refinancing myths

Four refinancing myths busted

Think refinancing is too hard? We bust some of the biggest myths keeping you from getting a better deal.

Have you given your mortgage a health check recently? Whether you are looking to lower your monthly repayments, restructure your loan or access more flexible options, refinancing may be a viable option. There are many myths surrounding refinancing, with the general perception being that it’s complicated, expensive and best left in the too-hard basket. The truth is that refinancing is quite straightforward and more affordable than you think.

Refinancing Myth 1: There are too many hidden fees associated with refinancing.

Sample ImageOn 1 July 2011, the Government abolished exit fees. Lenders are now banned from charging borrowers exit fees (like deferred establishment fees) on new loans, although fixed loans and loans prepared before 1 July 2011 still incur early repayment costs.

Matt Cunliffe

  • Matt won Broker of the Year in 2014 at the Better Business Awards in QLD, as well as Best Residential Broker
  • He is a Mortgage Choice broker based in South West Brisbane.

Queensland Broker of the Year, Matt Cunliffe from Mortgage Choice, Brisbane, warns that there are still fees to take into consideration. Smaller charges like document preparation fees, settlement attendance fees and title fees from both your outgoing bank and new bank are likely to be charged to borrowers. Some banks have set fees for these on top of other charges, others will include them in their settlement or establishment fees and some charge these fees on a case-by-case basis. Extra charges come into play when borrowers are looking to increase their loan, change to a fixed rate amount, or need to borrow more than 80% of the property value. In these instances stamp duty may need to be paid and/or lenders mortgage insurance (LMI) taken out on the extra loan amount. Banks and lenders vary significantly in their fees and charges but there are some unavoidable refinancing charges that are actually applied by the government rather than the lender. Each state has a set loan registration fee of between $100 and $160. Borrowers are required to pay this twice – once to deregister the loan with the previous lender, and then again to register it with the new lender. The standard costs associated with establishing and/or exiting standard variable rate home loans with the big four banks are outlined below.

BankStandard Variable Rate Mortgage ProductInterest RateDischarge CostsEstablishment Costs
CBAStandard Variable No Fee Home Loan4.52% p.a. (4.52% comparison rate)$0$0
NABNAB Tailored Home Loan5.25% (5.38% comparison rate)$350 discharge settlement fee

$600

$8 monthly service fee

ANZ

Simplicity Plus Basic Variable Rate

4.55% (4.60% comparison rate)

$160 settlement fee + fees to access government records and lodge paperwork.

$600 loan approval cost is currently waived upon request.

No ongoing monthly fee.

WestpacRocket Repay Variable Rate

5.29% (5.43% comparison rate) *from 4.69% with Premier Advantage Package

Discharge fee $350

$600 Loan establishment fee

$8 monthly service fee

Premier Advantage Package: $350 p.a., no establishment or monthly service fee.

Note: These figures are current at the time of writing. Lenders are required to provide all standard costs associated with their loan products, so there shouldn’t be any surprises when it comes to fees and charges. Individual refinancing situations vary considerably; however, be sure to ask specifically about fees and charges that may affect you. About comparisons of refinancing home loans today

Refinancing Myth 2: Refinancing is expensive and negates the benefits of a lower interest rate.

Sample ImageUsing the data in the table above and the Mortgage Switching Calculator from Money Smart, we tested this myth with a case study: Jim and Maria have owned their home in Queensland for three years and have a mortgage of $430,000. They have a Rocket Repay variable rate loan with Westpac. It has an interest rate of 5.98% and they repay it weekly. While Jim and Maria are happy with the options available to them, they feel the interest rate and ongoing costs are too high and have decided to switch to the no fee option with a 5.20% interest rate that Commonwealth Bank offers. If they stayed with Westpac, Jim and Maria would pay a minimum of $678 per week and $401,286 in interest and fees over the course of the next 22 years. If Jim and Maria move to the Commonwealth Bank, they will have to pay $350 in discharge settlement fees and $314.80 in third party registration fees ($157.40 x 2). It will take them three months to recover the $665 in switching costs and their minimum weekly repayments will be down to $632. They will save $84,415 in interest and two years and five months off the life of their loan. The benefits can quickly outweigh the expenses in many refinancing situations, particularly when you are doing a straight transfer and your LVR is less than 80%. If you are looking to consolidate debt or incorporate more flexible options, refinancing may be necessary and it can definitely still be to your advantage. Working with a financial planner or mortgage broker and having a specific budgeting strategy in place will help you make your loan work for you. About using our loan comparison calculator to compare loans

Refinancing Myth 3: All of the incentives that are currently being advertised are just marketing gimmicks.

Sample ImageAccording to Cunliffe, the incentives that banks are offer, such as rebates or waived fees, are definitely of some help. “Incentives are being offered to combat the retention processes that banks have in place to match offers when they get word of a client looking to discharge. By providing a contribution, it makes the costs somewhat irrelevant and a marginally cheaper rate or more preferred loan structure and features can see a refinance proceed with little concern for the imminent fees.” Instead of being wary of incentives, use the fierce competition in the market to your benefit. If the bank you are considering is not offering a particular incentive or package, be sure to ask before you shut down that option because they are often available upon request or are willing to match it. About comparisons of home loans offering cashback and rebates

Refinancing Myth 4: Refinancing is not worth the effort

Sample ImageIf you remember the process of buying your house as being stressful, keep in mind that refinancing is much more straightforward and less emotionally driven. Since that time, your personal situation has likely changed and the mortgage products available have become more competitive, so it’s worth looking again. Ideally you should review your mortgage annually, but now is the next best time. If you have a good relationship with your bank you can speak with them or keep an ear out for good deals and market trends. Cunliffe advises speaking with a broker to streamline the process and find out if it’s worth refinancing. “Not only will they be able to help with reviewing your current loan setup against the different offers in the market, you will be able to calculate the costs vs the benefits of refinancing.”

Some other considerations

Title If you are considering refinancing your mortgage, beware that the interest rate is not everything. Other variables will also come into play:

  • The relationship you have with your current lender. If you have a good relationship with your bank they may be willing to work with you to adjust the terms of your loan or match a competitor’s interest rate or terms.
  • Other debt and accounts that you might want to consolidate and bundle. What packages does the bank offer?
  • How long have you been paying off your current loan? If you are more than halfway through your loan, it may not be advisable to enter into another long term loan.
  • The flexible features available. Features on the new loan including an offset account, flexible repayments and redraw facilities may also help you pay your loan off quicker.
  • The comparison rate. As a general rule, the closer the comparison rate is to the advertised interest rate, the fewer fees and charges are added on to the loan. There are many exceptions to this rule, but it’s worth being aware of.

Refinancing a home loan isn't complicated and can save you thousands and years off your mortgage, so it's worth starting a comparison today. You can compare the home loans below to get you started, or if don't have as much time or would prefer an expert to help you, click the 'speak to a mortgage broker' tab to contact an experienced mortgage broker.

Compare refinancing home loans

Rates last updated June 20th, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.69%
3.69%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more (new or refinance). Terms and conditions apply.
3.64%
3.66%
$0
$0 p.a.
80%
Pay no ongoing fees and enjoy a flexible repayment schedule, including the ability to make unlimited additional repayments without penalty.
3.69%
3.69%
$0
$0 p.a.
70%
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.69%
4.11%
$0
$395 p.a.
80%
Save on interest with a 100% offset account and save on other ME products with this package loan.
3.49%
4.49%
$0
$395 p.a.
90%
Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.
3.52%
3.53%
$0
$0 p.a.
80%
Go from application to approval in as little as 20 minutes with a variable rate loan from this innovative online lender. Add a 100% offset account for $10 a month.
3.73%
3.76%
$0
$0 p.a.
80%
This basic loan offers discounts for higher borrowing amounts and carries no ongoing fees.
3.64%
3.67%
$0
$0 p.a.
80%
A mortgage with a competitive variable rate, limited fees and plenty of flexibility.
3.69%
3.94%
$0
$248 p.a.
70%
Get a sharp rate and a 100% offset account. Borrowers must have a 30% deposit.
3.64%
3.67%
$0
$0 p.a.
80%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments.
3.54%
3.58%
$0
$0 p.a.
80%
Eligible borrowers can get $900 cashback on this loan with a 100% offset account and a redraw facility.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.64%
3.69%
$600
$0 p.a.
80%
A competitive variable rate for borrowers with a 20% deposit or more. Guarantor option available.
3.65%
3.66%
$0
$0 p.a.
80%
This special rate mortgage has no ongoing fees and offers flexible repayments. Save $595 in establishment fees before 30 June.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Get a 100% offset account to save on interest charges, and pay no application fee.
3.69%
3.74%
$600
$0 p.a.
80%
A great interest rate home loan offer with unlimited redraw and unlimited extra payments.
3.68%
4.00%
$0
$299 p.a.
80%
Get a 100% offset account and rate discounts for higher borrowing amounts.
3.79%
3.79%
$0
$0 p.a.
80%
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan.
3.74%
3.74%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.62%
3.62%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more. Terms and conditions apply.
3.64%
3.64%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at 70% or below with this innovative online lender.
3.64%
4.02%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.70%
4.13%
$0
$395 p.a.
90%
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.77%
3.81%
$200
$0 p.a.
95%
A simplified mortgage with a low interest rate and a redraw facility.
3.79%
3.83%
$600
$0 p.a.
80%
A low interest rate loan with limited fees and a redraw facility. Principal and interest repayments only.
3.68%
3.69%
$0
$0 p.a.
95%
This variable rate loan offers flexible repayments and a redraw facility. Available with a 5% deposit.
4.19%
3.78%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.73%
3.76%
$0
$0 p.a.
80%
This basic loan offers discounts for higher borrowing amounts and carries no ongoing fees.
4.09%
4.12%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.99%
3.74%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.79%
3.79%
$0
$0 p.a.
80%
Get a 100% offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.68%
4.00%
$0
$299 p.a.
80%
Get a 100% offset account and rate discounts for higher borrowing amounts.
3.79%
3.84%
$600
$0 p.a.
90%
Buy your home with just a 10% deposit, few fees and a reasonable interest rate.
3.89%
3.92%
$0
$0 p.a.
80%
A low-fee line of credit loan from an online lender. Unlock the equity in your home and make interest-only repayments with a competitive rate.
3.94%
3.71%
$0
$0 p.a.
80%
Apply online for this fixed rate, low-fee loan with redraw facilities and an optional offset account.
3.83%
4.49%
$0
$299 p.a.
95%
Owner-occupiers can enjoy a discounted fixed rate, a rate lock feature and the ability to make additional repayments.
3.69%
4.47%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
3.78%
3.78%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.62%
3.62%
$0
$0 p.a.
95%
A low deposit mortgage with a competitive rate and plenty of flexibility. QLD residents only.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.85%
4.05%
$0
$350 p.a.
95%
This high LVR fixed rate loan allows you to borrow up to 95% of the value of the property you're buying.
4.09%
4.11%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Points on your mortgage (for a limited time, subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
4.09%
4.12%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and get flexible repayment options and a redraw facility.
4.14%
4.81%
$0
$0 p.a.
80%
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.99%
4.03%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and pay no application or ongoing fees.
3.59%
4.42%
$600
$0 p.a.
95%
Get a 1% discount for the first two years of your loan and pay no application or ongoing fees.
3.68%
3.69%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a fixed interest rate term for repayment certainty.
3.89%
4.97%
$0
$395 p.a.
95%
Get discounts on a range of Commonwealth Bank products and enjoy the option of fee-free extra repayments during the fixed term.
3.89%
4.96%
$0
$395 p.a.
95%
Switch to this loan and can get $1,500 cashback. Conditions apply. Package your home loan with a Qantas rewards earning Amplify credit card.
3.89%
4.88%
$0
$395 p.a.
95%
Low deposit package loan with a range of discounts. You could also earn up to 500,000 Velocity Points.

Compare up to 4 providers

Marc Terrano

Marc Terrano is a content marketer manager at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

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Important Information*
loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64%p.a.
comp rate of 3.66%p.a.

UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupied Variable P&I Rate — borrowing $700,000 or more

Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more. Terms and conditions apply.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.

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